William Kay: Volcano bubbles as our debt mountain grows

This week's new Bank of England figures showing that as a nation we are wallowing in all-time record levels of personal debt, is worrying both personally and collectively. Combined with the government's rising tide of spending, the debt mountain is storing problems for the future.

This week's new Bank of England figures showing that as a nation we are wallowing in all-time record levels of personal debt, is worrying both personally and collectively. Combined with the government's rising tide of spending, the debt mountain is storing problems for the future.

The debt will eventually have to be repaid, and as a first step millions of people will have to start spending less so they do not take on even more debt. That has potentially serious implications for the economy and therefore the stock market.

Shares have been encouragingly resilient, even through the dog days of summer. Confidence is slowly returning, but it will be fragile for some time and I do not yet rule out another plunge deep into the 3000 levels of the FTSE 100 index. In that context, the debt mountain must be treated with care. It could turn into a volcano.

At the personal level, debt is double-edged. It is fairly easy for most people to cope with, as interest rates are so low. But because pay rises are also low, debt does not melt away as painlessly as it did when inflation used to roar away.

This is the best time to sort out your finances, when things are relatively calm. Tedious though it may be, it is worth regularly reviewing debt and savings or investments.

Certainly, you should ditch that store-card bill you ran up when you bought something extravagant with the lure of a 10 per cent discount. Try to concentrate your owings on your mortgage, because that is likely to be costing the lowest rate of interest.

If your debt is getting out of control, do not run away from it. Think what to do, and if the answers are too grim to contemplate do not be afraid to seek advice. Tell lenders: this may take bravery, but it will repay you.

The good news is that you can tap plenty of free help, from the likes of National Debtline (0808 808 4000), your nearest Citizens Advice and the Consumer Credit Counselling Service (0800 138 111).

* If debt is bewildering for some people, phone deals seem to be deliberately designed to befuddle. BT was the latest this week with Mobile Home, a plan that was apparently made to fit like a glove on to its target audience of families with teenage children.

But closer inspection made it seem less alluring. The rental and call charges are high, the free time is not as generous as it sounds at first, and basing a package even partly on the fickle whims of teenagers is highly risky.

While parents are sitting at home eagerly waiting for their children to call, an image with a slightly sepia-tinted feel in the 21st century, a lot of kids don't want to phone just because mum and dad expect it. The mobile phones selected for the scheme are hardly cutting-edge, and BT is not exactly the coolest network provider.

Mobile Home will undoubtedly work for some families, and BT's stated sales target are suitably modest. But this looks destined to become yet another idea that looked better on the drawing board than in customers' hands.

Now that eight in 10 of us have mobile phones, it is logical for providers to seek unexplored niches and try to persuade us to use phones in new ways. But, as with the internet and other hi-tech devices, people have been level-headed about what it will get sucked into. Simplicity and value for money are the only gimmicks that last.

* Congratulations to Nationwide building society for winning its campaign to give Link cash-machine users warning of charges. It was iniquitous, and all too characteristic, of banks to hide the charge, and Matt Barrett at Barclays was quick to back down when he saw what a loser this was.

Nationwide is now fighting to have the warnings in the form of stickers on the machines. This sounds messy, and I wouldn't put it past some banks to print their stickers in the most unobtrusive possible colours.

Surprisingly, Nationwide is not fighting Link's decision to put off the implementation of a warning system until next April. Surely it would not have been too difficult to make the change by Christmas, when people might not be looking closely at charges?


voicesGood for Lana Del Rey for helping kill that myth, writes Grace Dent
The University of California study monitored the reaction of 36 dogs
sciencePets' range of emotions revealed
Life and Style
fashion Designs are part of feminist art project by a British student
Arts and Entertainment
The nomination of 'The Wake' by Paul Kingsnorth has caused a stir
Arts and Entertainment
The Tour de France peloton rides over a bridge on the Grinton Moor, Yorkshire, earlier this month
Snoop Dogg pictured at The Hollywood Reporter Nominees' Night in February, 2013
people... says Snoop Dogg
Life and Style
food + drinkZebra meat is exotic and lean - but does it taste good?
Arts and Entertainment
Residents of Derby Road in Southampton oppose filming of Channel 4 documentary Immigration Street in their community
voicesSiobhan Norton on why she eventually changed her mind
Scottish singer Susan Boyle will perform at the Commonwealth Games opening ceremony in Glasgow
commonwealth games
Arts and Entertainment
Dwayne 'The Rock' Johnson stars in Hercules
filmReview: The Rock is a muscular Davy Crockett in this preposterous film, says Geoffrey Macnab
Life and Style
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    PMO Analyst - London - Banking - £350 - £400

    £350 - £400 per day: Orgtel: PMO Analyst - Banking - London - £350 -£400 per d...

    Cost Reporting-MI Packs-Edinburgh-Bank-£350/day

    £300 - £350 per day + competitive: Orgtel: Cost Reporting Manager - MI Packs -...

    Insight Analyst – Permanent – Up to £40k – North London

    £35000 - £40000 Per Annum plus 23 days holiday and pension scheme: Clearwater ...

    Test Lead - London - Investment Banking

    £475 - £525 per day: Orgtel: Test Lead, London, Investment Banking, Technical ...

    Day In a Page

    Noel Fielding's 'Luxury Comedy': A land of the outright bizarre

    Noel Fielding's 'Luxury Comedy'

    A land of the outright bizarre
    What are the worst 'Word Crimes'?

    What are the worst 'Word Crimes'?

    ‘Weird Al’ Yankovic's latest video is an ode to good grammar. But what do The Independent’s experts think he’s missed out?
    Can Secret Cinema sell 80,000 'Back to the Future' tickets?

    The worst kept secret in cinema

    A cult movie event aims to immerse audiences of 80,000 in ‘Back to the Future’. But has it lost its magic?
    Facebook: The new hatched, matched and dispatched

    The new hatched, matched and dispatched

    Family events used to be marked in the personal columns. But now Facebook has usurped the ‘Births, Deaths and Marriages’ announcements
    Why do we have blood types?

    Are you my type?

    All of us have one but probably never wondered why. Yet even now, a century after blood types were discovered, it’s a matter of debate what they’re for
    Honesty box hotels: You decide how much you pay

    Honesty box hotels

    Five hotels in Paris now allow guests to pay only what they think their stay was worth. It seems fraught with financial risk, but the honesty policy has its benefit
    Commonwealth Games 2014: Why weight of pressure rests easy on Michael Jamieson’s shoulders

    Michael Jamieson: Why weight of pressure rests easy on his shoulders

    The Scottish swimmer is ready for ‘the biggest race of my life’ at the Commonwealth Games
    Some are reformed drug addicts. Some are single mums. All are on benefits. But now these so-called 'scroungers’ are fighting back

    The 'scroungers’ fight back

    The welfare claimants battling to alter stereotypes
    Amazing video shows Nasa 'flame extinguishment experiment' in action

    Fireballs in space

    Amazing video shows Nasa's 'flame extinguishment experiment' in action
    A Bible for billionaires

    A Bible for billionaires

    Find out why America's richest men are reading John Brookes
    Paranoid parenting is on the rise - and our children are suffering because of it

    Paranoid parenting is on the rise

    And our children are suffering because of it
    For sale: Island where the Magna Carta was sealed

    Magna Carta Island goes on sale

    Yours for a cool £4m
    Phone hacking scandal special report: The slide into crime at the 'News of the World'

    The hacker's tale: the slide into crime at the 'News of the World'

    Glenn Mulcaire was jailed for six months for intercepting phone messages. James Hanning tells his story in a new book. This is an extract
    We flinch, but there are degrees of paedophilia

    We flinch, but there are degrees of paedophilia

    Child abusers are not all the same, yet the idea of treating them differently in relation to the severity of their crimes has somehow become controversial
    The truth about conspiracy theories is that some require considering

    The truth about conspiracy theories is that some require considering

    For instance, did Isis kill the Israeli teenagers to trigger a war, asks Patrick Cockburn